People love good shops. It might not be cool to admit it, but watching the hordes of people flocking after each and every lockdown to their local high-street is testament to this being true. While online shopping has seen record growth over the past year, nearly £7 in every £10 is still spent offline. According to the UK Government’s Office of National Statistics internet sales as a percentage of total retail sales (ratio) (%) hit a record 36% in November 2020. Online had been growing steadily towards 20% of total retail sales, but, thanks to lockdowns and the COVID outbreak, it has leapt to above 30%. But, eventually the growth with slow and then will plateau. So, where is the optimism around physical retail?
Left - Do we need a national campaign to remind people how good shops can be?
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The department store sector is at a crossroads. It’s do or die time, and a race to right these historical businesses before the whole thing capsizes.
Left - The John Lewis in Birmingham is closing after only 5 years
John Lewis was always seen as a steady ship amongst the losers, like Debenhams and House of Fraser, made unseaworthy with oodles of private equity debt.
But, even John Lewis, the famous cooperative, is suffering in this retail storm. Is it time to batten down the hatches and lose its price matching promise? What can the John Lewis Partnership do to sail through?
John Lewis’ ‘Never Knowingly Undersold’ promise is a left over from a bygone time, much like its ‘Clearance’. Group chair, Sharon White, told the Sunday Times, last Sunday, she expected the price pledge to go. The famous promise to match rivals' prices has become harder to defend as competition from online retailers has become ever tougher and eaten into margins. The slogan is nearly 100 years old having been in place since 1925. "The proposition is important because it signifies being fair to society. We're reviewing it to improve it,” she said.
Pre-COVID, the John Lewis Partnership - John Lewis and its supermarket Waitrose - full year trading update for the 52 weeks ending January 25th showed operating profits dropped by 23 per cent year-on-year to £123 million, while pre-tax profit suffered a 25 per cent year-on-year decline to £146 million. Meanwhile, revenues declined 1.6 per cent year-on-year to £10.15 billion.
While core operating profit at Waitrose grew by £10 million to £213 million, it slumped by £75 million to £40 million reflecting weak sales in home and electricals, investment in technology and higher staff costs.
The staff bonus - the profits split between its employees - was two per cent. The lowest amount since 1953 when staff received nothing.
Right - John Lewis' shiny Birmingham store was opened to great fanfare in 2015
Profits were falling at John Lewis’ department stores before COVID 19, and while sales at Waitrose would have increased, it is doubtful it would have made up the difference. So, what’s gone wrong at John Lewis?
Over Expansion - Many people might think John Lewis’ huge retail estate was a legacy leftover from a previous era, but it is worth noting nearly half, 24 of their 50 John Lewis shops, were opened after 2000. They weren’t a traditional legacy retailer and haven’t been afraid to close stores over the years. The Knight & Lee department store in Southsea closed in 2019 after more than 150 years, and was the first to be closed since 2006. John Lewis has announced the closure of a further eight stores including its shiny flagship in Birmingham, above New Street Station, opened only five years ago. This year between 60% and 70% of John Lewis's sales are expected to be online, compared to 40% last year, making a large number of stores harder to justify.
Waitrose has been lightly trimming its 338 store estate announcing the closure of 17 stores since June 2018 and a further three Waitrose stores are to go, at Helensburgh in Scotland, Four Oaks in the West Midlands, and Waterlooville near Portsmouth, later this year.
The company has said they were exploring whether excess shop estate could be used for new mixed-use affordable housing. White said she is talking to developers and investors about partnering to build flats, many of them affordable, on top of existing shops, starting in west London.
John Lewis has announced selling more Waitrose food in their department stores which would make good use of excess space and fill the in-town convenience many other food retailers offer as long as the opening hours are extended.
Lack of Convenience - As people shunned town centres and shopped local, Waitrose & Partners lack of convenience stores has become more prominent. Out of its 338 shops, across the UK, just 65 are "little Waitrose" convenience shops. In comparison, Tesco operates 153 Metro stores and more than 1,700 Express outlets. Sainsbury's Convenience Stores Limited (trading as Sainsbury's Local) is a chain of 770 convenience shops operated by the UK's second largest supermarket chain Sainsbury’s.
Waitrose has a 5.1% share of the food market, making it the eighth-largest retailer of groceries in the UK. These convenience stores can charge more for their restricted selection of products and would make Waitrose, perceived as more expensive by many, more competitive on pricing.
White told John Lewis staff, "We are looking at how we make our products available through other routes, reflecting the fact that Waitrose has a smaller presence in the convenience market than other supermarkets.”
Waitrose needs to extend its opening hours. Many close at 9pm which feels early in today’s competitive supermarket landscape.
Too Much Focus On Fashion - White told the Sunday Times the chain needed "more inspiration, surprise, fun" and that it would compete by "curating" items in store better. John Lewis would focus less on women's fashion and get rid of travel and spa services. Instead it would offer more financial, home and garden products.
John Lewis made a big push into the fickle and highly competitive world of fashion a few years ago, and, while it was the correct place for expansion at the time, it has taken focus away from its core home and electricals. During lockdown people have re-evaluated their homes and want to spend the money they would have spent on holidays and fashion on their surroundings.
It is worth noting that online electrical retailer AO saw annual revenues of £1.05 billion to March 2020, up 15.9% on a year earlier. AO’s customer base grew last year to nearly 6.5 million customers in the UK. This, along with many other online retailers, must have eaten into John Lewis’ traditional hold on the white goods market.
Waitrose/Ocado Loyalty Battle - September sees Waitrose’ 20 years relationship with online delivery service Ocado come to an end. The tie-up generated 6% of Waitrose’s sales. They are being replaced by Marks & Spencer.
Ocado has already said it has no spare capacity for new customers and it will be interesting how many stay loyal to either brand.
Waitrose has two online distribution centres - Coulsdon and Edmonton in London - to service their online orders and has an opportunity to poach customers from Ocado.
Ocado says it will stock 6,000 M&S products, compared with the 4,000 it sells as part of its supply deal with Waitrose. The alternatives would be the “same price or lower, and of the same quality or better” than the Waitrose ones, Ocado said.
Can Waitrose compete with the robotic efficiency of Ocado? Waitrose had enlisted Today Development Partners, a technology business run by Ocado co-founder Jonathan Faiman, to help grow its online operation without Ocado. However, the deal ended after just four months and it subsequently emerged Faiman, who left the online business in 2009, was being sued by Ocado.
Online orders are always restricted by the number of vans, drivers and delivery slots. A Waitrose tie-up with Amazon Fresh has been rumoured to help with these online growth ambitions. It is predicted sales online with John Lewis to become a 60 per cent and Waitrose to rise to over 20 per cent.
Waitrose has too many disparate websites selling flowers and gardening products, and should push these all into one site and delivery option. It should also link John Lewis and Waitrose more.
Too Expensive? - Walk into a John Lewis or Waitrose and it feels like everybody shopping there has white hair. While the Boomers are an affluent demographic, the brands are perceived as being too expensive and aren’t engaging with younger or those who are more price conscious. It is particularly noticeable at Christmas with small gifts coming in much more expensive than competitors or what consumers are willing to pay. It needs to broaden its pricing with more prices at the lower end. It also needs to offer more exclusive products and give people a reason to pay more. It needs to think of places like TK Maxx as competitors.
Can Rental Replace Sales? - The company said it was considering creating a way for rental of its products and re-sale of used items. While everybody is going rental crazy, can John Lewis renting white goods and sofas make up sales or will it just cannibalise existing sales and be an expensive distraction?
Announced in August 2020, the items will be rented via a third-party site, Fat Llama, with the service available initially just in London but set to roll out nationally if successful. People can choose between 50 different items from the retailer’s range. Prices start at £17 a month for a desk or chair rented for 12 months, and rise for larger goods on shorter contracts.
John Lewis has said "fair value" would still be central to its ethos but "in a more modernised form” and it hopes to have a new slogan to replace “Never Knowingly Undersold” in place by October.
In January 2020, John Lewis stopped publishing its weekly sales figures, it was seen as a bellwether for the whole retail sector.
Department stores are suffering the most at the moment. Many of these issues were pre-COVID 19, but, like all retailers, it would have speeded up the need for change. John Lewis is a special example of a retailer which, luckily, hasn’t been saddled with a debt mountain. They have the opportunity to be the last national department store standing in the UK and could reap the benefits of high-street competitors disappearing, but that doesn’t change the challenges from online.
It sounds like John Lewis is moving in the right direction and making the right noises, but this cautious retailer needs to make some hard decisions. John Lewis is a retailer people would miss, they need to remind people of that. It just needs focussed adjustment rather than radical amputation.
Not to sound too much like Scrooge, though he is part of the problem, but have you noticed how all the Christmas adverts look the same this year?
Their nostalgic Dickensian approach of snow, jingle bells, street urchins and false bonhomie is strikingly similar and just doesn’t feel particularly fresh from retailers trying to smile through the pain of the current retail environment. It feels faker than a Trump press release and disappointing and safe from marketing departments crossing everything and hoping their brands make it through to the new year.
Left - More urchins? Sainsbury's 2019
What started with wise men offering up gifts was hijacked by retailers and brands over the past century to make all their year’s profits in a few short months. Today's Christmas is, arguably, an American creation of commercialisation. It was Coca-Cola after all who changed Father Christmas from green to red to suit their branding.
This isn’t about taking Christmas back to its meaning, whatever that is, it’s about reflecting contemporary times and stripping the crap out of Christmas, which sits alongside Halloween and Valentine’s as commercial ‘Festivals of Crap’ with our overindulgence reflected in the bulging brown bin the days after.
Christmas needs a reboot to take it from Victoriana fake-fest to a simpler and more sustainable pagan and friends and family focussed festival to get us through the longest nights.
“Most of Christmas ads look almost identical because agencies and brands start from the almost same brief: ‘Lets create a piece of heart-warming storytelling that people will share online, so avoid pushing a specific product. Make it pretty’. says Marcio Delgado – Influencer Marketing Campaign Manager and Producer, www.marciodelgado.com
"On paper, for the purpose of approving production budgets months before Mariah Carey’s ‘All I want for Christmas is you’ climbs back the charts – again – it seems the perfect deal. However, when customers start being bombarded by similar content, exhaustively promoted within their social media feeds and favourite TV shows, it all starts to look too much of the same.” says Delgado.
Lesley Stonier, brand storytelling and marketing strategist. Founder of We Mean Business, London - helping women and entrepreneurs find their authentic voice and share their story with confidence, says, “I think for the last 5 or so years we’ve seen John Lewis and even more recently Lidl/Aldi do very well from a certain style and format of ad. I believe the briefs the ad agencies are receiving from these companies and their competitors now will be something like, I want what they are doing, but make it ours.
Right - More snow? John Lewis 2019.
“It just all feels very same-y and therefore it becomes difficult to distinguish who the retailers actually are. There’s no stand out brand this year. The ads all blur into one Christmassy mass with no distinction. Food, kids, 18th century nostalgia, it’s difficult to tell them apart now.” says Stonier.
Stephanie Melodia, marketing specialist, founder of startup marketing agency, Bloom says, “Persuasion is at the root of successful advertising, and the mechanism to this is by appealing to people’s emotions. As a nation that has become less religious and traditional over time, Christmastime no longer bears the same connotations as before. Instead, the “Dickensian nostalgia” plays to the magic and joy one can only achieve over the holidays - whether its spending time with loved ones, exchanging gifts, enjoying good food & drink, or all of the above! It’s worth noting the generations that the Dickensian style will appeal to have quite a vast age range, from the grandparents to the millennials, (thanks to Mr. Dickens' literary genius in itself, as well as the modern remixes, like The Muppet Christmas Carol - for example).
What can brands do to differentiate themselves more and make their marketing campaigns feel more contemporary? “Firstly, they could focus on what their unique perspective is on Christmas. Although I think that’s where the challenge ultimately lies. When it comes to retail, we now have promotions for Christmas starting 2 wks before Black Friday so it’s very hard to differentiate except via price.” says Stonier.
“John Lewis, for example, could have led the pack by taking a more sustainable approach to Christmas. Encouraging less packaging waste for example. Or a supermarket encouraging less food waste. That would be a different approach and that would have much greater stand out because you’re changing the story people expect to hear, and giving them something different to mull over, giving them a reason to choose to do something different and make that choice with you.” she says.
“Behavioural changes, especially at a large scale, take a long time to kick in (whilst there is still lots of impactful work happening at the moment!)” says Melodia. “Hardwired social traditions like exchanging gifts at Christmastime won’t go away any time soon, but people are definitely thinking a lot more about how and what they buy than before. Retailers need to have sustainability at the heart of their businesses (if they don’t already) and beware of the PR risk in greenwashing while doing so.” she says.
Left - Tesco's 2019 Christmas table
Will this type of Christmas survive Extinction Rebellion and people rethinking over consumption?
“I think shoppers will always shop on price discounts. But it doesn’t drive loyalty so the retailers are just creating a vicious cycle that is then difficult to extract yourself from.
“There’s a risk to a different approach, but I’m surprised no one has capitalised on the consumer demand for more sustainable approach to life, and taken Christmas, the season of excess as the time to put a stake in the ground.” says Stonier.
What will Christmas look like in the future for brands and retailers?
“I don’t have a crystal ball, but I can see us ironically returning to a simpler, less extravagant time, much like the Dickensian era. Where gifts are made rather than bought, and that we focus on the meaning and act of giving rather then needing, wanting and buying.” says Stonier. “The reality is there is very little we “need” now days in first world countries. We’re saturated. So what comes next? People search for meaning and purpose, and brands are doing good in the world, will be leading our hearts, minds and wallets in the future.” she says.
“We’ve already moved so far away from the religious and familial traditions from a mere century ago, the rate of change is only accelerating faster and faster. I believe people coming together and enjoying shared experiences will be the core festive factor that will remain for the foreseeable future, with the consumerist side of the holidays on the down.” says Melodia.
These Christmas ads are looking as done as the designer Christmas tree. This isn't about taking out the fun and the coming together of Christmas, it's about a fresher approach that is more reflective of where we are right now as consumers. The Christmas future looks simpler and less wasteful. ’Please, sir, no more!’.
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We’re often bombarded with marketing speak talking about “local”, but it’s mostly just that, speak. Remember when HSBC used to refer to itself as the “The world’s local bank.”, it meant nothing more than operating in lots of different markets and countries. Local became more about geography than anything else. It joined the group of words, such as luxury, modern and sustainable, that get used all too often, but have become meaningless.
Trying to balance the idea of a much loved local, independent retailer and the scale of a larger chain is the dream of any contemporary brand or retailer. According to CACI Consulting Group’s ‘Location Dynamics” engine, 75% of the UK high streets have the same brand profile. They say “The concept of clone towns is well known, but we believe clone stores are the real issue.”
Left - Welcome to clone town - Can brands decentralise and empower its people on the ground to make decisions?
It’s boring and in a saturated market many cookie-cutter, anonymous chains are no longer appealing to consumers and as such we’re seeing those with too many stores close or reduce their footprint.
“In a market where consumers are seeking localisation and engage in brands that mirror their values it is essential that a store is part of the community in which it sits.” says Alex McCulloch and John Platt, Directors of CACI Consulting Group.
“Customers can buy generic product sold in a uniform way online, they seek out stores for the personal, curated, local and engagement. Brands that therefore dictate homogenous stock and store fit out regardless of the local customer will not deliver that experience and as a result fall away.” they say. “The brands that trust in their people on the ground, invest in them and empower them to know their shopper as well as supporting them with forensic data analysis on what sells, what doesn’t, which marketing worked etc are the ones that will succeed.”
“Data alone cannot fix the problem, but nor can people. Good brands leverage both. A great example of this is Waterstones, finding a similar one in the fashion sector is a challenge – typically independents lead the way here. One fashion brand that doesn’t shine in this area is M&S, which serve up the same store, stock and fit-out regardless of market, and have only just entrusted their store managers to know their own P&L; the antithesis of employee empowerment.”
The type of store finding it hardest to adjust to modern retail was, originally and ironically, the most localised. Nearly every town and city had their own individually named department store up until quite recently. It was only in the early 2000s that John Lewis, with the exception of Peter Jones and Knight & Lee, which is now closed, rebranded each store to the company umbrella name. Tyrrell & Green in Southampton, Bonds in Norwich, Trewins in Watford, Jessops in Nottingham, Bainbridge’s in Newcastle, Robert Sayle in Cambridge and Cole Brothers in Sheffield all disappeared. They were all recognisably John Lewis because of the store interiors and branding, but retained their historical monikers into the 21st century and the affection that each town would have for them.
DH Evans on Oxford Street was re-branded as House of Fraser in 2001 along with many other well known names such as Rackhams of Birmingham and Kendals of Manchester. (It will be interesting to watch House of Fraser’s next rebrand to Frasers in 2020, back to the original Glasgow store’s name, with a new store in Wolverhampton’s Mander Centre following the exit of Debenhams. “Frasers of Wolverhampton” could have quite the ring to it?)
Up until 2018 the Newcastle based department store chain, Fenwick, had individual buyers for its 9 department stores. In order to save costs they centralised their buying last year saying, ”Fenwick has today announced a proposal to modernise and reorganise the business, moving to a functionally led structure while retaining our local focus.
“These proposals are part of a broader strategy to modernise the business and to invest in both Fenwick’s multichannel offer – including IT upgrades and ecommerce – and its flagship Newcastle store.” Previously each store ran autonomously.
It is understandable the desire to have everything centralised under one name and buying team. It saves costs and doesn’t confuse the customer. It also makes more sense because of the internet and having one unified website, but it loses the personalisation and affection that people had for these brands and nobody wants to think that their town or city is the same as everywhere else. (In out-of-town shopping centres it doesn’t matter quite as much because their isn’t so much ownership of place).
Right - Do clone towns need a pop-up Banksy store like this one in Croydon?
This reblanding doesn’t take into account British idiosyncrasies or quirks and our love of personality. Many chain stores want bland boxes. The historical nature of the fabric of many of these older brands and their buildings have been looked at as a problem, money pit and not conducive to modern retail rather than embracing their uniqueness. It’s only poor and long term under investment that has let these retailers down. Liberty of London wouldn’t be the same if it was in another building. The building is the brand.
"There is a fear that localised = expensive. It doesn’t need to – you know a Waterstones when you go in it and the branding is universal, but each store manager has autonomy over the look and feel of the product, what is on promotion and maintains local charts etc.” says McCulloch and Platt, Directors of CACI Consulting Group.
"Chains need to trust that their staff on the ground can make decisions on how they sell and give them space to do so within the brand framework. Equally they should be able to use POS data, online sales data and customer data to inform the manager on which lines have worked, which initiatives drove sales and how to better them.”
Engaged employees make better employees especially if they are personally invested in decisions. It’s the opposite of automation and the robotic attitude to manual shop employees.
“By trusting in the people on the front line, educating them, training them and supporting them through data will you also likely see key staff retention increase because staff will be empowered in their roles.” says McCulloch and Platt.
Is the design of stores an issue here and how can design catch up with consumer behaviour? “I’m not sure design is at fault here, there are many truly innovative stores and spaces in the market. The issue is more typically underinvestment in stores and a homogenous approach to stores. A brand can tailor its social ads based on geography and consumer (a 20-year-old single male in London will get served a different ad. to a 28-year-old mother of two in Liverpool) but don’t consider the same approach and nuance with their stores.” says McCulloch and Platt.
Facebook has been putting ‘Beacons’ into stores to send consumers personalised ads and to track their movements. Retailers also need to work backwards from this and tailor the stores to the people who are frequenting them. They could find out this information from peoples’ Bluetooth being turned on and then change the buy of the store according to the breakdown of the consumers and visitors.
Obviously, not each and every store is identical. Stores are different in size and can accommodate different levels of ranges. Some chains specifier different product for different locations, but, it’s more a mindset and preconception that they’re all the same which is the main problem here. People want to be pleasantly surprised. “I’m-not-going-to-go-in-there-because-I-already-know-what-they-sell-and-I-can’t-be-bothered” is the modern attitude to many chain stores. The more individual or local they were perceived to be, the more often you’re likely to take a look. If you want anonymous and clinical you’ll shop online, it’s about pride of place.
Just as Boohoo shutters all Karen Millen and Coast stores and relaunches both exclusively online, it could be worth rethinking their strategy. We often think of physical retail going head-to-head with online. It’s one or t’other. The digital upstart appeared, grew quickly and is making the former, and in many cases painfully, contract as we head towards a new balance of consumer retail. But, before you decided to close all your stores in your retail network, there’s something you should know. Ninety per cent of all UK retail spend if influenced by a store and, according to research by CACI Consulting Group, across the UK, online sales are 106% higher within a store’s catchment area. Fashion, in particular, was 127% higher.
CACI Consulting Group provides solutions to make the best possible location planning and customer targeting decisions for brands and this UK wide survey was conducted with over 2,500 consumers across 20 different brands. They are calling it the ‘Halo Effect’ and it describes the uplift in online sales due to the presence of physical stores. “We know that stores facilitate showrooming and click & collect and we can quantify them as well, but what was less known until today is the uplift that stores have on what were considered ‘pure play online sales’ – or what we characterise as the ‘sit on the sofa with an iPad, get it delivered to your house or office shop’. These sales are twice as likely to take place within a store’s catchment than outside it – demonstrating the effect that physical stores have in driving online sales.” says CACI.
The catchment area is defined using drivetimes based on where 80% of customers who spent in store come from according to the survey data. The size of the catchments therefore varies by brand so, for example, John Lewis has a much larger catchment than a Boots.
“The presence of a physical store gives a customer the security of knowing that should something go wrong there is a store you can go to. In addition, seeing the store as they go to work and shopping puts the brand front of mind and builds trust with the shopper, and store led marketing in the catchment area reinforces the brand. All of these secondary effects drive online behaviours up. It is no coincidence that bar a few notable exceptions some of the biggest online brands also have national store networks: Argos, John Lewis, Next. This is also why Amazon are increasingly exploring what a network might look like.” says CACI.
Fashion, in particular, was noticeably higher at 127%, why is this? “We believe that fashion is higher because it is more of a discretionary purchase. This has two impacts – you are more likely to see it, consider it and then purchase later, at home (a subconscious showrooming) and you are also more likely to return it, particularly if you live within a store’s catchment. Therefore, being near a store triggers increased engagement.” says CACI.
For every £1 spent online outside a store’s catchment, £2.06 is spent online inside a store’s catchment. According to CACI, consumers still value a trip to the shops. Although frequency is down, average spend is up per visit and net promoter scores in shopping locations have increased by almost a third. Suggesting we’re more, rather than less, satisfied when we visit. “In this environment the role of the store can be far more nuanced. No longer a place that just shifts stuff, it is simultaneously a marketing hub, fulfilment centre, experiential destination and showroom.” says CACI.
Norfolk Natural Living's founder, Bella Middleton says, "The fact that online sales are 106% higher within a store's catchment is not a surprise. Nor should it be. It is evidence that the internet simply cannot replace the trust and community feel of visiting a physical retail store.
"At Norfolk Natural Living, we have a retail store in Holt, Norfolk, and a website selling our products internationally. Despite some incredible media coverage having grown awareness of our sustainable products internationally, we still see more orders from within the Norfolk area than any other region.
"To me, this is an opportunity for retailers to remember that the internet isn't everything. It is fast, convenient and comparatively easy to manage your business online, but people still cling onto that desire for trust and community. Even if they ultimately put their card details into a website rather than a card reader.” she says.
It appears that people also like local online. “As an online retailer based just outside of Sheffield when we have looked at our regional sales we found it really interesting the sheer volume of sales we have in counties close to home compared to further away and when our website shows us the locations our customers are from there is a spike in cities within a 35 mile radius.” says Lucy Arnold from Lucy Locket Loves, a women’s sportswear brand.
Could these kind of stats be the motivator to see pure play online retailers open physical stores? “We already are and the false distinction between on and offline will only blur further.” says CACI. "If you are a pure online retailer today, you only have 15% of the available spend in the market open to you because 85% of consumer spend touches a store. In addition, your competition online will often already have a store network and operate at a competitive advantage in marketing and brand awareness. In those circumstances why wouldn’t you go play in store?”
Is there any evidence where stores have closed and online sales have gone down? “Mothercare is the clearest one. As they embarked on a store closure program, they have seen online sales fall as well.” says CACI.
Is this information compelling enough to keep stores open is the real question? If rents and rates drop then stores will have a far brighter future and this type of online ‘Halo Effect’ will be another reason to keep stores open or be reopened. Having the shops in the right places to maximise this catchment area theory is key and reducing overlapping stores will be the obvious step for those with a larger retail network. It’s all about finding the perfect balance and looking at physical and online working together rather than against each other.
The next time you arrive at your local mainline railway station have a look at the retailers lining the concourse. Where once it was Boots, a few Upper Crusts and a plethora of deep-frying fast food outlets, is, today, being replaced by retailers who previously wouldn’t have been seen dead amongst the pigeon droppings and leaky roofs.
Following the huge success of retail rail developments such as Birmingham’s New Street and London’s Kings Cross/St Pancras, investors, who still want to invest in retail developments, are looking to where the people are and those symbols of the Victorian steam age are ripe for reinvention.
Rail travel is having a renaissance, in the last 20 years the number of people travelling on the UK rail network has doubled, and looks like it will continue to do so with its lower carbon impact and trends such as Sweden’s Flygskam - Read more here - making people think more about their travel decisions and the impact it has on the environment.
Left - Artist's impression of the new Waterloo development of the former Eurostar terminal
According to the Office of Rail and Road, rail passenger journeys in Great Britain in 2018-19 reached a record high of 1.759 billion. It increased by 3.0% compared to the previous year and was driven by a 3.9% increase in the London and South East sector.
London’s Waterloo is the busiest station in Britain for the 15th consecutive year, despite the total number of passenger entries and exits falling by five million to 94.4 million.This fall was in part due to a three-week closure for upgrade work in August 2017, which brought the former Eurostar platforms back into use after they were vacated in November 2007.
In the rest of the UK, Glasgow Central retained its position as the busiest station in Scotland and 11th in the overall list, with passengers using it 32.9million times this year, and Cardiff Central was top in Wales with more than 12.9 million entries and exits, making it 33rd overall.
We’re seeing a new golden age in rail travel and retail and property investors want in. Waterloo has unveiled plans to convert the former Eurostar terminal into a 135,000sq ft shopping mall to open in spring 2021. Called 'Waterloo.London', forty glass-fronted stores and restaurants will form a new “upmarket shopping destination to rival St Pancras International”. The new scheme is being developed by London and Continental Railways (LCR) – the UK government-owned property development firm and the company behind the redevelopment of St Pancras International train station. A mezzanine and public spaces will run along a new pedestrianised street called the 'Waterloo Curve’. Time Out Market will be an anchor tenant, consisting of 17 restaurants and three bars across two floors.
“Waterloo.London will set a new benchmark for progressive retail and transport destinations in the UK,” LCR development director Adrian Lee said. “Brands will have a truly unique opportunity to tap into a market of Waterloo’s 100 million passengers, the 20 million tourists that visit the South Bank every year, and its surrounding vibrant community and growing office population.” he said.
Over in West London, new plans have been unveiled for Victoria station, the UK’s second busiest station with almost 80 million passenger journeys a year, and said to be biggest overhaul in its 168-year history. Developers plan to take off the roof of the station, creating a giant concrete and steel box around the 19 platforms to allow the building of towers above. The Duke of Westminster’s property company, Grosvenor, developer Landsec and Victoria’s Business Improvement District, have held secret discussions over the past 18 months on developing London’s second busiest station. Details are still vague at this stage, but no doubt retail will feature heavily on the lower floors of the station. The current dated looking shopping centre at the back looks tired and isn’t integrated into the station design well enough.
Right - Waterloo.London will feature a TimeOut Market with 17 restaurants and 3 bars
Much needed modernisation of infrastructure has been a catalyst for cities to develop and reinvigorate themselves. Birmingham’s New Street station went from voted one of the worst buildings in the UK to a modern shopping centre with trains attached when it reopened in 2015. A huge John Lewis department crowned the mirrored steel exterior and has become a symbol of the regeneration of Britain’s second largest city.
These redeveloped train stations have quickly become favourites places where people choose their leisure time rather than simply travelling through. The top four UK stations for customer satisfaction according to Transport Focus data were London King’s Cross (96%), London St Pancras (95%), Birmingham New Street (92%) and Reading (92%), all having undergone major refurbishments in recent years.
The most successful rail retail development has to be St Pancras International, the glamourous home to the international Eurostar service. The station’s arcade area was built primarily as a beer store and 150 years later, and £800 million spent, it has, since its 2007 opening, continued to add premium retailers such as Fortnum and Mason, John Lewis, Godiva, Benugo, Nespresso, Fratelli, Chanel, GANT and Hamleys..
Today, it attracts approximately 50million visitors a year and 1 in 6 of those who visit the station do not catch a train. Total retail sales at St Pancras International during the Christmas trading period (22nd October to 31st December 2018) grew 6.3% year on year.
St Pancras International saw strong growth across all retail categories, including a 4.1% year-on-year growth in food sales, and an 8.7% growth in non-food categories. The station’s 6.3% like-for-like growth over the festive trading period, significantly outperformed the wider UK retail sales results, which were flat year-on-year and -0.7% on a like-for-like basis from December 2017.
People are time poor and combining a journey with a great shopping experience is one way to entice money out of people’s pockets. Consumers are increasingly lazy and no longer want to travel just to go shopping - Read more here - they want shopping integrated with the rest of their lives and their increasing desire to travel. Airports hold too many restrictions, so train stations are becoming an increasing focus. You rarely see empty retail units at stations. Developers need footfall and when yours in the tens of millions, it's difficult to see it not working. City centres will shift towards these rail hubs and they will no longer be the entry point but the destination.
At the end of a tumultuous year for traditional retail, and at the start of another, which doesn’t appear to offer much respite, there’s been a distinct trend in rebranding for both luxury and high-street brands. While you’d expect them to want to stand out, it seems as though they all want to blend into one another. This homogenisation is a case of an expensive “reblanding” exercise. Rebranding means creating a different identity for a brand, from its competitors, in the market, which, in fashion, is even more important especially when you're trying to flog luxury goods and the idea of difference and individuality. This feels like the opposite.
The recent rebland list is long: Belstaff, Celine, Calvin Klein, John Lewis, Burberry, Berluti and Balmain have all gone for simple and bolded logos without any of the details and distinct serifs. Playing it safe, what these new logos and fonts say is a lack of confidence and often change for change’s sake.
Left - The recent logo "reblands"
In August, Burberry unveiled its new logo. Replacing the Burberry Equestrian Knight logo with its bespoke Bodoni font, which had been used by the clothing company since 1901, the new logo is the work of celebrated British graphic designer, Peter Saville. It’s also worth noting he rebranded Calvin Klein with a similar font when Raf Simons took over and wanted to refresh.
"The new logotype is a complete step-change, an identity that taps into the heritage of the company in a way that suggests the twenty-first-century cultural coordinates of what Burberry could be," Saville exclusively told Dezeen. Somewhat cryptic and full of marketing speak, he describes what he and Riccardo Tisci, the new Burberry Creative Director, settled on as “modern utility,” adding, “It looks like it’s been there forever, but it’s still contemporary.”
Right - Hedi's masterstroke?!
Tisci said on Instagram ‘Peter is one of our generation’s greatest design geniuses. I’m so happy to have collaborated together to reimagine the new visual language for the house.’
Burberry are in the throes of changing everything way before the new Creative Director’s impact has been proven. As his first collection hits stores to a rather muted response by the fashion press, it’ll be interesting to see how it sells, especially the items with this new logo on.
Seb Law, Fashion Copywriter & Journalist, says, “I really hate that they’ve added’ ENGLAND’ to the Burberry logo after London. As if it’s London, Texas or something.”
It “Seems like an attempt to look ‘international’ and more premium, but also it’s now becoming an established way of a new designer starting at a different house to mark the start of their chapter. Does the general consumer care about this, or is it dive behaviour? Also rebrands cause plenty of chatter in fashion circles and build publicity – see Hedi’s previous rebrand of SLP. All press is good press, apparently.” says Law.
Hedi Slimane is a designer who likes to put his mark onto a brand and in September it was announced that the French house, Celine would be, controversially, losing its accent. Law and others have been defacing the brand’s posters by returning the accent to the first e.
“For me, it’s a matter of good use of language. As a copywriter and journalist (with a degree in French), diacritics aren’t just a pretty typographic tool to be played around with at the will of a designer, they’re an integral part of the word.” says Law. “‘Celine’ and ‘Céline’ are different words, pronounced differently (‘sell-een’ and ‘say-lean’, respectively). he says.
“It’s a continuation of the cult of personality over brand, in both cases. Causing a splash, in whatever way possible, seems to be the aim of the game. With Burberry, I’m disappointed that the logo doesn’t have a more uniquely British feeling, which the old one did IMO – I do love the interlocking TB print though.” says Law. “With Céline, it’s a classic case of Hedi doing whatever he wants. Brands should be aiming to exercise their unique personalities; this uniqueness is what attracts customers and maintains a brand’s personality. Homogenisation might attract sales, at least initially, and while change is obviously necessary, and often good, these two rebrand exercises feel like they’re a bit half-arsed. They’ve succeeded at building publicity, but is that what a logo redesign should do?” he says.
Left - The new logos are all very similar
On the high-street, John Lewis, in September, rebranded as John Lewis & Partners at a reported cost of £10m. Its first rebrand in 18 years and inspired by the company's 1960s "diamond pattern" motif, John Lewis managed to not only complicate its name but also lose its trademark dark green. Opting for safe black, it was yet another example of this reblanding trend.
In an age when these brands should really be trying to expressive confidence in themselves, these boring logos show a striving for safety and an anti-criticism blandness. It’s hard to be critical and negative about something so simple, yet they aren’t memorable or standing out. These aren't utility companies. Fashion’s current love of the sans-serif is definitely missing something.
Mid-market department stores have become the punch bag for the state of modern retail. Often the largest, most visible and expensive stores to run, they are the cumbersome dinosaurs of the British high-street and, much like those, talk is about them dying out.
Two of Britain’s biggest department store chains, John Lewis and Debenhams, unveiled their rebrands on the same day, this week. Much like a first day at school, and a fresh seasonal start, this is their equivalent of a fresh text book and pencil case. But, will it be enough?
Left - John Lewis & Waitrose adds its Partners to their new logos
John Lewis is ramming home the fact it’s a big, fat cooperative by adding ‘Partners’ to everything. For the first time in the company’s history the names of both John Lewis and Waitrose have added ‘& Partners’.
At the same time, they also unveiled the largest own brand womenswear collection of 300 designs, which was created entirely in-house and carries the new name ‘John Lewis & Partners’. Plus its first own-brand gifting collection called ‘Find Keep Give’. The range is comprised of unique pieces, the majority of which were designed in-house by Partners.
This is John Lewis really putting its stake in the ground for point of difference. The future, they think, is something desirable you can’t get anywhere else. Never knowingly sold elsewhere!
Rob Collins, Waitrose & Partners Managing Director said: “This moment is far more significant than simply adding words and changing the design. It symbolises something bigger, expressing what’s different about our business and signalling our intent to make that difference count for even more: committed, knowledgeable Partners who care about the business they own, sharing their love of food and offering great customer service.”
Right - All about the D at Debenhams
John Lewis Partnership said in June that it would continue to invest in both businesses at a rate of £400m-£500m per year, to enable the two retail businesses to differentiate themselves from other retailers by innovating in products, customer service and services with the creation of ‘Customer Service Ambassadors’ who provide warm and personalised customer service front of store. As well as healthy eating specialists, they are training Partners to offer a concierge style service and equipping ‘Personal Stylists’ with the skills to deliver daily fashion talks; as well as investing in technology to improve customer service. This will be hard for other retailers to match.
But, John Lewis is feeling the pain too. They just announced the loss of back office jobs in IT, finance and store security from its 50 departments stores with 250 roles affected. This reflects the recent plunge in profits, and the announcement in June that profits in the first half of the year will be "close to zero”.
On the other hand, Debenhams was definitely due a refresh. Devised by new creative partner, Mother, Debenhams has unveiled a “modern, friendlier logo”. A new media tag line “do a bit of Debenhams” invites customers to “celebrate their discovery of the brands and products they love”.
Debenhams chief executive, Sergio Bucher, said, “Whilst we have made real improvements to our stores and continue to improve our product offering we also want to signify overtly to customers that Debenhams is changing and give them more reasons to come in store – our new brand identity is a way of signalling the change.”
As part of the ‘Debenhams Redesigned’ overhaul, the online shopper journeys have been reduced by half and conversion rate improved by 20%. The first new logo in 20 years, Debenhams’ new look reflects the investment and changes that Bucher, who was previously at Amazon, has made.
In June, Debenhams said full-year profits will be lower than expected - the third time it has issued a profit warning this year. The department store blamed "increased competitor discounting and weakness in key markets" for the profit shortfall. It said annual pre-tax profits would come in between £35m and £40m, below previous estimates of £50.3m.
Left - Debenhams new logo 2018
“Perhaps the rebrand for both these important retailers could be have been actioned earlier, but I am pleased to see that both Debenhams and John Lewis have now grasped the opportunity and wish them both well with the next steps. I am also encouraged to see that both businesses see the initiative as much more than signage and are taking the opportunity to look at every aspect of their businesses in terms of both the relevance and the importance of excellence in delivering goods and services to their customers.” says Michael Sheridan, CEO and founder of retail and brand design agency Sheridan&Co.
One department store chain that could possibly do with a makeover is the privately held Fenwick. The Newcastle-based department store chain is to shed 421 jobs as part of a cost-cutting plan following a slump in profits. The retailer reported, yesterday, it had not been immune from the struggles facing its competitors. It said management, support and shop floor staff would be affected by the job cuts - the result of a restructuring - taking its total workforce to 2,879 people.
Fenwick posted a 93% fall in pre-tax profits to £2m in the year to 26 January. They said a 3.6% fall in sales over the 12 months was a resilient result.
A spokesperson said: "Our annual results reflect the challenging market conditions all department store groups are facing, including increased competition from online retail, declining footfall on the high street, and increasingly competitive price discounting - factors that have been exacerbated by a rise in the cost of living that has led to a fall in consumers' disposable income.”
Fenwick is a small chain, with 9 branches, mostly in wealthy market towns. They have no e-commerce ATM, and, while they plan to, I think it could be too little, too late and they would be better off investing in their stores and “owning” the towns they are in. They need to remind us why we need to go to a Fenwick’s store. They should follow John Lewis’ lead and offer good customer service and product points of difference. It doesn’t have shareholders pushing for short-termism profits so should look longer term.
We’re still waiting to see what is happening with House of Fraser, but I’m sure we’ll see a new logo and branding there within the next 18 months.
These department stores are using new logos to draw a designed line under the past with the aim to looking forward. They’ve been surrounded by negativity for so long and this must be hitting the morale of the staff and this is a way of saying “new start” and they are investing.
There’s a lot of play for, but everybody needs to become leaner and faster, and many chains have no more meat left to cut. They, now, need shoppers returning and buying more. Only exclusive products or services they can’t get anywhere else will draw them back.
John Lewis has deep pockets and Debenhams’ survival could be at the expense of another chain. John Lewis’ classic branding didn’t feel tired, but maybe they thought it was important to change before it does, but I would have kept the original dark green colour. Debenhams’ new look looks fresh without trying too hard. It looks reliable and welcoming and does reflect the changes that have been going on in-store. Debenhams has come on massively over the last couple of years and it was a good idea to have a clear out of its “designers” - read more here. Now, it needs enticing, contemporary product to replace it.
The mid-market department store, as a concept, isn’t dead, but for the bad ones it’s the beginning of the end and no fancy new logo or slogan will fix that.
Read more expert ChicGeek Comments - here
They say the Chinese only buy the cheapest or the best. It’s simplistic, but it is the direction all retail markets seem to be headed in. The British market has been evolving into this for a while, now, and those stuck or stranded in the middle are suffering or dying.
The middle has been squeezed or forced to choose their direction of travel as we all race to the bottom or top.
The cheapest often requires huge volumes and multinationals and the best requires a perception of quality, luxury and good service.
As a brand or retailer, you have two questions to ask yourself, today: are we the cheapest? This can be split into different categories depending on where the brand sits and, are we the best? This is more complex and can mean many different things and is subjective. If you can’t say yes to both or either, they you need to start making some serious changes.
Imagine a Venn diagram: two circles, one the cheapest, one the best and price running up and the down the side axis. Any brand coming into the area where the two circles overlap is in a safer and strong position. Those within one of the circles has a focus, while those floating somewhere out of either need to work out which one they want to be in, and fast.
Let’s look at the cheapest option. This is why Sainsbury’s is getting into bed with Asda. The larger scale promises savings of around 10% to the consumer, and will help them compete with Booker/Tesco and the German food retailers, Aldi and Lidl. It’s an example of mid-market retailers needing to pair up or die.
In fashion, New Look revenue to the year 24th March 2018 was down -7.3% to £1,347.8m. New Look has not only announced store closures, but it’s also just said in its recent financial report and turnaround plan, that ‘Pricing (will be) lowered to offer significantly better value with 80% of product to retail under £20’.
Eighty percent of product under £20 will really put the brand toe-to-toe with Primark and, I think, it’s the right move for them. You have to go down fighting, but they’ll going to have to shift more product at these cheaper prices. Before, New Look wasn’t the cheapest, and it wasn’t the best in terms of being the most fashionable or desirable fast-fashion retailer. It used to be one of the cheapest, but then Primark came along.
It tried to be more fashionable, but at a time Boohoo, ASOS were growing and offering high fashionability at ridiculously low prices.
New Look says it wants to 'return to (a) value-led fast fashion and wardrobe basics offer with full price focus’. The margins will be so small they’ll need all the full price they can get.
H&M, long one of the darlings of fast retail, has seen its shares down nearly 20% this year and the company has said it will need to slash prices to reduce inventories, damaging profit margins. It has an $4.3 Billion in unsold stock and needs to be careful that its size won’t be its downfall.
It also explains its focus on different, ‘best’ sister brands like Arket and COS. H&M isn’t in the same position as New Look, yet, but they need to make sure it’s still seen as one of the best in terms of affordable fashionability and also offering value.
Marks & Spencer is another one trying this new best and cheapest approach. The clothes have arguably got much cheaper and the food is still perceived as the best, but it’s this balance that is hard to achieve within the same brand, especially knowing what consumers come to you for.
House of Fraser’s recent announcement to close 31 stores is a reflection of the growth of John Lewis both offline and online. John Lewis has continued to open in towns, in or near those House of Frasers, and House of Fraser isn’t cheaper or better. It probably explains the closure of the huge Birmingham store as John Lewis opened a shiny new shop at the railway station just a couple of years ago.
House of Fraser will need to pair up with somebody (maybe Debenhams?) or disappear altogether. Sports Direct, Mike Ashley, has shares in both and will no doubt be pushing for it and then they really can compete on price and dominate their local markets.
So, who is getting it right? Zara, for the best in fashionability and speed and John Lewis in customer service and being ‘Never Knowingly Undersold’. But, like a game of musical chairs, it’s changing all the time.
As for the ‘best’, this is what many luxury brands rely upon. This could be quality, use of materials, origin etc. Many ‘luxury’ brands have lost control of these in the race for large quantities and bigger margins. They have to be careful because a few poorly made, overpriced products will ruin the perception of any brand.
But, you can also find the cheapest within this market. For example, Johnstons of Elgin, one of the best Scottish producers of scarves and blankets. It makes for everybody from Hermès to Burberry. While a scarf from them is not cheap, say £100, it’s far cheaper than one with a designer name on. They are also the best at what they do and the reason why these brands use them.
Or, a brand like Paul Smith. When looking at a multi brand website like Mr Porter, it feels like one of the most affordable brands on there. I think its recent troubles has seen it get more competitive and tread that fine line between affordable and exclusivity. They are also the best at colour.
Or, you could can look at the total top, at the most expensive and exclusive. This is the pinnacle of the market and to be true to both would only be made in very limited numbers. This is chasing a very small number of big-fish consumers and, as such, it limits the size of the business. But, this can also to used to sell ranges of cheaper products, such as perfume or sunglasses, but even these categories are harder, now that people aren’t so hung up on brands.
This simplistic approach to the market cuts through some of the wood to see the trees in a highly competitive and changing retail landscape. So, the next time you look at your own brand or somebody else’s, you know which two questions to ask.
Grown exclusively for the Zegna family, Zegna bergamot and petitgrain bigarade capture the sundrenched effervescence of the Italian seaside with a refreshing zest of lemon in Zegna’s latest men’s fragrance. Freesia and dewy leaves impart a soft fluidity to the citrus.
A classic aromatic heart of lavendin, cypress and rosemary adds cool woodiness to the invigorating spice of neroli. Violet leaves and watermelon further facet the fragrance with a green crunch and refreshing splash. The confident ease of the scent emanates from earthy woods, cypriol heart and tree moss, while musk and sandalwood offer golden warmth to ocean-sprayed seaweed for a sensation of the glistening and sun-kissed.
TheChicGeek says, “This needs to be a cologne or used like one - which means you continually reapply - as it’s all about the top. Neroli - orange blossom - is one of my favourite ingredients and this couldn’t come at a better time of year when our nostrils are open and this intoxicating blossom chimes with the season.
The bergamot and neroli go together like chicken and egg, while the other ingredients take a supporting role. This doesn’t last long, but, then it’s all about that initial hit."
Left - Ermenegildo Zegna - Acqua Di Neroli - 100ml - £82 Exclusively at John Lewis from 1st June 2018